A new study by the Wall Street Journal confirms it: Many Americans will have to trade their “golden years” for a retirement filled with scrimping and sacrifice.
Pre-retirees aged 55 through 70 today are the first generation that was “left on their own” to prepare for retirement, according to Alicia Munnell, Director of the Boston College Center for Retirement Research.
As pension plans that provide a guaranteed income for life disappeared, 401(k)s, 403(b)s, IRAs and similar government and employer-sponsored plans replaced them.
It’s an experiment that has failed many. According to the Wall Street Journal, for Americans approaching retirement age…
“Their median incomes, including Social Security and retirement fund receipts, haven’t risen in years, they have high debt, are often paying off children’s educations and are dipping into savings for aging parents.
“Their paltry 401(k) retirement funds will bring in a median income of under $8,000 a year for a household of two.”
What Does a Reduced Lifestyle in Retirement Look Like?
It’s not pretty. You may have to work multiple low-wage jobs, give up things you now consider necessities, skip vacations and even haircuts. You may have to appeal to your children to help out.
A “combination of economic and demographic forces has left older Americans with bigger bills and less money to pay them.”
Market crashes, gains in life expectancy, plus the soaring price of education, have left many in their 50s and 60s supporting adult children and older relatives. Increasing health care costs have caused many to cut back on saving for retirement.
And now Social Security is predicted to be just a few years away from paying out more than it takes in. The fund will “become depleted and unable to pay scheduled benefits in full on a timely basis in 2034,” according to the Board of Trustees for Social Security.
That’s only 16 years away!
Even many public-sector workers who expected a pension for life are living with uncertainty as cash-strapped governments consider pension cuts to cover their massive unfunded liabilities.
By some estimates, public pensions are underfunded by $6 trillion. According to the Federal Reserve, pensions – public and private combined – were an average of 27% underfunded as of last year.
So what can you do about it?
The 6-Step Plan to Protect Yourself from this Mess
If you are one of the many people who are approaching retirement age with insufficient savings – or you’re relying on Social Security or a pension for retirement income – here is a 6-step plan to help you get back on track:
Step 1: Don’t put your head in the sand – that won’t make the problem go away.
Step 2: When calculating how much you’ll need in retirement, use the currently recommended savings withdrawal rate of 2.8%, and assume you’ll live to at least age 95 because there’s a good chance you or your partner will.
Step 3: Don’t rely too much on volatile, unpredictable government-sponsored retirement accounts for income in retirement. If you don’t know the minimum guaranteed value of your savings when you want to tap into them, you don’t have a plan – you’re gambling.
Step 4: Don’t rely too much on Social Security or a public pension fund, for the reasons discussed above.
Step 5: Save more in guaranteed, safe and liquid financial vehicles. The Bank On Yourself wealth-building strategy allows you to know the guaranteed minimum value of your plan at any given point in time.
These plans have grown in value every single year for more than 160 years and have never had a losing or stagnant year.
They do not go backward when the market crashes.
Step 6: Find out how adding Bank On Yourself to your financial plan can help you enjoy the financial security you deserve by requesting your free Analysis here right now.
Regardless of your age or situation, it’s probably not too late. But don’t drag your feet for even one more day. Click this button to get started: